From the viewpoint of consumers, we assess how well Small and Medium-sized Businesses (SME) perceive their ability for innovation. This work seeks to close the gap in the literature caused by the lack of previous analysis of this topic. A questionnaire survey was utilized for the purposes of quantitative analysis. We performed principal component and confirmation analysis and a logistic regression. It was discovered that customers' perceptions of innovation in the services sectors vary depending on sociodemographic traits, the type of innovation, and the applicability of marketing innovation. Positive impacts were shown to be produced via organisational, marketing, cultural, and process innovation structures. The ability to innovate is influenced by six factors: product, organisational, process, marketing, culture, and resources. Because customers and enterprises have a closer relationship, this strategy is appealing. The results will help some brands reflect on their positioning to show competitive advantages. Customers participated with their perception.
Top1. Introduction
Innovation has always existed in human thinking and these innovative thoughts have contributed to the development of the Earth. Currently the world is going through accelerated changes and for growth and sustainability it’s increasingly important to invest in innovation.
For a long time, companies have worked with very closed systems in which there was a great deal of separation between the external environment and the internal environment. The focus was always on internal effectiveness and efficiency, leaving aside the interest in customer satisfaction. But at the end of the 20th century, these organizations began to be forced by society and the market to adopt a more open system that increases the number of processes, products and services that can be innovated.
According to Ramos and Zilber (2015), the market environment defines success for companies through the selective process, in which the companies that survive are those that can adapt to new market conditions.
Inevitably, technological evolution is associated with business innovation, but often a company's innovation is also directly linked to it’s organizational structure and culture.
To support the challenge of continuous innovation, companies need to have a strategic posture directed toward investments in improving their ability to produce new knowledge. These investments can be in creating products, building new production processes, improving organizational structures and using new marketing designs (Ramos and Zilber, 2015).
According to Saunila (2020), research on innovation capabilities, generally ignores the situation of small businesses, so the need arises to redefine “innovation capacity” and identify their resources.
According to the European Commission (EC) (2015), Small and Medium Enterprises (SMEs) “represent the majority of businesses in the European Union and play an essential role in the economy, being crucial to foster competitiveness and employment.” and in order to support and grow these companies EC try to help through financing programs.
The State should also intervene to help SMEs, since in Portugal the percentage of this type of company is around 99.9% and employ 78% of the active population, which is higher than the average in the European Union (respectively 99.8% and 64%).
Most SMEs in Portugal do not combine their innovation strategy with organizational strategy and some have no innovation plan at all. There are gaps in the strategy and resources of SMEs. With process strategy, the gap is relative to “the unevenness of direction between strategy formulation and implementation.” (Schreiber, 2012). Regarding resources, according to McCartney (2020), the gap is that of funding, where only a small portion of capital investment can be used for innovation. This greatly affects and hinders the development of innovation capacity, which as a result demeans the competitive advantage and growth of the company.
In this sense, it’s relevant and interesting to study from the consumers' perspective because consumers are increasingly making a major contribution to the success or failure of organizations.
It’s the first time that this approch is presented directly to SME’s innovation and this provides an opportunity for the consumers’ participation, which could allow some enterprises and their brands to reflect on their positioning, in order to present competitive advantages. This study can be very useful for SMEs owner-managers, business managers and even state officials to acquire new concepts of innovation management as well as a sense of view of an external “entity”.
In literature review the concept of innovation will be addressed in detail with approaches from different authors and the associated models, and studies. After that, the methodology and data collection process are described and the analysis of the results is presented. Finally, we finish the paper with the final conclusions and suggestions about future research.